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TMI Blog2023 (7) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... equipment, the same is liable for service tax under Business Auxiliary Service - in identical issue, only for the different period, has been decided in BLACK BOX LIMITED (FORMERLY KNOWN AS AGC NETWORKS LIMITED.) VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD-III [ 2023 (1) TMI 188 - CESTAT AHMEDABAD ] where it was held that amount collected by the Appellant from their customers against as activation charges of equipment/ software features are covered under the activity of sales of goods and not covered under the provisions of Service as defined in the Act. It can be seen that the facts and legal issue are identical to the present case therefore, the ratio of the above decision is squarely applicable - Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Service. We find that in identical issue, only for the different period, has been decided vide order No. A/10004/2023 dated 04.01.2023. The relevant order is reproduced below:- "13. We have carefully considered the submissions of both sides and perused the records. We find that the issue to be decided before us is whether the appellant is liable to pay Service tax on "Software Activation Charges" under the taxable services of "Business Auxiliary Services". 14. We find that the whole case has been made by the Department on the basis of balance sheet which shows a separate income under head software activation charges. Appellant purchased EPABX from the foreign based vendor and further sales the same to customers. The said system cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of payment of VAT/CST. Further, Article 366(12) of the Constitution of India defines the expression "goods", which include all materials, commodities and articles. It is an inclusive definition. Article 366(29A)(a) deals with a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration. On the other hand, Article 366(29A)(d) deals with a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. The question as to whether the software is goods or not came up for consideration before the Apex Court in the decision in Tata Consultancy Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nden Trust Co. v. Commr. of Taxes, 465 A.2d 1100; University Computing Co. v. Commissioner of Revenue for the State of Tennessee, 677 S.W.2d 445 and Hasbro Industries, Inc. v. John H. Norberg, Tax Administrator, 487 A. 2d 124 taking a different view. In the above cases, it was held that when stored on magnetic tape, disc or computer chip, the software or set of instructions is physically manifested in machine-readable form by arranging electrons, by use of an electric current, to create either a magnetised or unmagnetised space. It was also held in those cases that by sale of the software program the incorporeal right to the software is not transferred since the copyright of the incorporeal right to software remains with the originator and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66(12) of the Constitution and as defined under the said Act is very wide and includes all types of movable properties, whether those properties be tangible or intangible. We are in complete agreement with the observations made by this Court in Associated Cement Companies Ltd. (supra). A software program may consist of various commands which enable the computer to perform a designated task. The copyright in that program may remain with the originator of the program. But the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes, and marketed would beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. The word "software" used in the said Apex court judgment is important; software can have many forms and can be sold by way of many modes. Further, the contention of department is also not acceptable in view of the Judgment of Infosys Technologies v. C.T.O. - 2009 (233) E.L.T. 56 (Mad.) in the said matter the Hon'ble High Court has held that "if the software whether customised or non-customised satisfies the Rules as a 'goods', it will also be 'goods' for the purpose of Sales tax. Goods may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of being transmitted, transferred, delivered, stored and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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